Retail in Asia

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Isetan Mitsukoshi CEO says won’t cut prices even with return of deflationary mindset

The chief executive of Isetan Mitsukoshi Holdings Ltd said Japan’s biggest department store chain by sales would never cut prices, even as consumers return to the deflationary mindset of delaying purchases in the expectation of price falls.

Hiroshi Ohnishi also said the end is near for “bakugai” explosive buying, or shopping sprees by Chinese tourists that made up for slow domestic demand.

“Middle-income customers’ purchases have been declining,” Ohnishi said. “And the number of foreign shoppers is still on the rise but value per purchase is falling.”

“But we would never cut our prices. That would hurt the chain’s upscale grade,” he said.

Deflation-beating government policies initially sparked a stock rally and spurred spending after their introduction from December 2012.

But officials failed to meet inflation targets and market and consumer sentiment have since waned, prompting companies such as Uniqlo owner Fast Retailing Co Ltd to backtrack on plans to raise prices.

At Isetan Mitsukoshi, sales particularly of high-end goods grew markedly after the government began its anti-deflation drive, but have slowed since the start of 2016, Ohnishi said.

Overall sales fell for a third consecutive month in May, by 8.7% compared with the same month a year prior.

To counter the decline, Ohnishi said Isetan Mitsukoshi plans to open a store in another Asian market the next three to five years, to complement its stores in China, Malaysia, Singapore, Taiwan and Thailand.

(Source: Japan Today )